REPUBLIC OF THE PHILIPPINES,
REPRESENTED BY THE REGIONAL
EXECUTIVE DIRECTOR, REGION X,
DEPARTMENT OF PUBLIC WORKS
AND HIGHWAYS, PETITIONER, VS.
BENJOHN FETALVERO,
RESPONDENT.
DECISION
LEONEN, J.:
Money claims against the government
cannot be the subject of writs of
execution absent any showing that
they have been brought before the
Commission on Audit, under this
Court's Administrative Circular No.
10-2000[1] and Commission on Audit
Circular No. 2001-002.[2]
Facts:
This is a Petition for Review on
Certiorari[3] praying that the July 29,
2011 Decision[4] of the Court of
Appeals be reversed, and that the
September 22, 2009[5] and April 23,
2010[6] Orders of the Regional Trial
Court be annulled.[7]Further, it is
prayed that a temporary restraining
order be issued to enjoin the trial
court from implementing the assailed
Orders. The Court of Appeals affirmed
the trial court Orders, which granted
the Motion for the Issuance of an
Order for a Writ of Garnishment filed
by Benjohn Fetalvero (Fetalvero).[8]
Fetalvero owned a 2,787-square
meter parcel of land in Iligan City,
Lanao del Norte. The lot was covered
by Transfer Certificate of Title (TCT)
No. T-25,233 (a.f.).[9]
In 1999, the Department of Public
Works and Highways, Region X took
569 square meters from Fetalvero's
property to be used in its flood control
project. Fetalvero stated that the
project's construction on that portion
of land rendered the remaining part
useless, so he demanded payment for
the entire area at P15,000.00 per
square meter. However, under
Presidential Administrative Order No.
50, series of 1999, the just
compensation Fetalvero was entitled
to was only P2,500.00 per square
meter, or a total of P1,422,500.00, plus
10% thereof. The rate was based on
the Bureau of Internal Revenue zonal
valuation in 1999, when the property
was taken. Despite negotiations, the
parties failed to agree on the amount
of just compensation.[10]
On February 13, 2008, the Republic of
the Philippines (Republic), through
the Office of the Solicitor General, filed
before the Regional Trial Court a
Complaint[11] for expropriation against
Fetalvero.[12] It prayed "for the
determination and payment of the just
compensation and the entry of a
judgment of condemnation of the 569
square meters portion of [Fetalvero's]
property."[13] The case, docketed as
Civil Case No. 7118, was raffled to
Branch 3 under Presiding Judge Albert
B. Abragan (Judge Abragan).[14]
Subsequently, the Office of the
Solicitor General sent a letter[15] dated
April 10, 2008 to Atty. Earnest
Anthony L. Lorea (Atty. Lorea), the
Legal Staff Chief of the Department of
Public Works and Highways, Region X.
In its letter, the Office of the Solicitor
General deputized Atty. Lorea to assist
it in Civil Case No. 7118, as his
authority was "subject to the
reservation contained in the Notice of
Appearance filed by [the] Solicitor
General[.]"[16]
On April 16, 2008, the Office of the
Solicitor General filed before the trial
court a Notice of Appearance[17] dated
April 10, 2008. It entered its
appearance as counsel for the
Republic in Civil Case No. 7118, and
informed the trial court that it
authorized Atty. Lorea to appear on its
behalf. It emphasized that since it
"retain[ed] supervision and control of
the representation in [the] case and
[had] to approve withdrawal of the
case, non-appeal[,] or other actions
which appear to compromise the
interest of the Gove1nment, only
notices of orders, resolutions, and
decisions served on him will bind the
[Republic]."[18]
On February 13, 2008, the Republic of
the Philippines (Republic), through
the Office of the Solicitor General, filed
before the Regional Trial Court a
Complaint[11] for expropriation against
Fetalvero.[12] It prayed "for the
determination and payment of the just
compensation and the entry of a
judgment of condemnation of the 569
square meters portion of [Fetalvero's]
property."[13] The case, docketed as
Civil Case No. 7118, was raffled to
Branch 3 under Presiding Judge Albert
B. Abragan (Judge Abragan).[14]
UNDERSIGNED PARTIES:
Regional Executive Director, Region 10, DPWH
-And-
Benjohn Fetalvero
AGREE as follows:
1. That the area involved is 1,428 square meters.
2. That the price per square meter is Nine
Thousand Five Hundred Pesos (PHP 9,500.00)
per square meter or a total of Thirteen Million
Five Hundred Sixty[-]Six Thousand & 00/100
(PHP 13,566,000.00) which latter is the
amount to be paid in full b[y] the plaintiff to the
defendant not later than September, 2009.
3. After September, 2009, it will earn interest at
12% per annum until fully paid.
4. Expenses for documentation and transfer to
the account of Plaintiff.
IN WITNESS WHEREOF, the parties
hereto have mutually and voluntarily
agreed to the above stipulations and
sign this Agreement at PMC Iligan City,
on this 1st day of September, 2008 for
the consideration and approval of the
Honorable Court.
(Sgd)
illegible..
Fetalvero filed before the trial court a
motion to approve the Compromise
Agreement and for the issuance of
judgment.[22]
The Office of the Solicitor General
replied that the government cannot be
bound by the Compromise Agreement
since it was not submitted to its office
for review, which is a condition under
the deputation letter and the Notice of
Appearance. Thus, it was improper for
the Department of Public Works and
Highways to directly submit the
Compromise Agreement to the trial
court for judgment. Further, the
Compromise Agreement failed to state
how it arrived at the just
compensation of P9,500.00 per square
meter.[27]
In its September 22, 2009
Order, the trial court granted
[32]
Fetalvero's Motion.
The trial court further held that since
the Office of the Solicitor General
received a copy of the trial court's
October 17, 2008 Order, the judgment
was valid and binding on the Republic.
Further, government funds in official
depositaries remain government
funds only if there was no
appropriation by law. The trial court
found that funds were already
appropriated under SAA-SR 2009-05-
001538 of the Department of Public
Works and Highways "for payment of
the road-rights-of-way."[34] Hence,
Fetalvero's Motion should be
granted.[35]
The Republic moved for
reconsideration, but its Motion was
denied by the trial court in its April 23,
2010 Order.[37]
The Republic, through the Regional
Executive Director of the Department
of Public Works and Highways, Region
X, filed before the Court of Appeals a
Petition for Certiorari.
On July 29, 2011, the Court of Appeals
rendered a Decision,[42] denying the
Petition for lack of merit.
The Court of Appeals further held that
public funds may be seized or
garnished if they were "already
allocated by law specifically for the
satisfaction of the money judgment
against the government."[46]
On October 6, 2011, the Republic,
through the Office of the Solicitor
General, filed before this Court a
Petition for Review on Certiorari[
Petitioner asserts that the Court of
Appeals erred in dismissing its
Petition "on a purely technical
ground."[55] It argues that the Court of
Appeals should have disposed the case
based on its merit since it involves a
substantial amount of public funds.
Petitioner avers that the just
compensation is grossly
disadvantageous to the government.
The actual market value of properties
in Mahayahay, Iligan City is P500.00 to
P1,000.00 per square meter in 2003.
However, the just compensation for
respondent's property in the
Compromise Agreement is P9,500.00
per square meter. Since the property
was expropriated in 1999, petitioner
argues that the just compensation
should have been lower than the
properties' selling price in 2003.
Moreover, the Compromise
Agreement does not indicate how the
parties arrived at the just
compensation.[57]
Finally, petitioner contends that
despite the approval of the allocation
under SAA-SR 2009-05-001538 and
the partial payment of the just
compensation to respondent, it can
still question the Compromise
Agreement's validity. Assuming that
respondent proves that he has a claim,
he cannot seize government funds by
virtue of a writ of execution or
garnishment. He must first file it
before the Commission on Audit under
Commonwealth Act No. 327, as
amended by Section 26 of Presidential
Decree No. 1445.[58]
On the other hand, respondent notes
that the Compromise Agreement had
been approved by the trial court on
October 17, 2008. Thus, it had already
attained finality by the time petitioner
questioned its validity in June 2009.
Respondent also points out that
petitioner did not even avail of the
remedies under the Rules of Court. It
did not file an appeal, a motion for
new trial, a petition for relief, or a
petition to annul the trial court
Orders.[59] Instead, it filed a petition
for certiorari to "indirectly
annul"[60] the judgments.
Issues:
1. First, whether or not the
Compromise Agreement is void for
not having being submitted to the
Office of the Solicitor General for
review;
2. Second, whether or not the
Compromise Agreement is void since
the amount of just compensation is
allegedly grossly disadvantageous to
the government; and
3. Finally, whether or not government
funds may be seized under a writ of
execution or a writ of garnishment in
satisfaction of court judgments.
I addressed to Atty. Lorea and the
Petitioner's contentions are partly
meritorious.
On petitioner's first claim, this Court
takes this opportunity to reiterate our
ruling in Republic of the Philippines v.
Viaje, et al.,[64] which clarified the role
of a deputized counsel in relation to
the Office of the Solicitor General:
The power of the OSG to deputize legal
officers of government departments,
bureaus, agencies and offices to assist
it in representing the government is
well settled. The Administrative Code
of 1987 explicitly states that the OSG
shall have the power to "deputize legal
officers of government departments,
bureaus, agencies and offices to assist
the Solicitor General and appear or
represent the Government in cases
involving their respective offices,
brought before the courts and exercise
supervision and control over such
legal officers with respect to such
cases." But it is likewise settled that
the OSG's deputized counsel is "no
more than the 'surrogate' of the
Solicitor General in any particular
proceeding" and the latter remains the
principal counsel entitled to be
furnished copies of all court orders,
notices, and decisions. . . . The
appearance of the deputized counsel
did not divest the OSG of control over
the case and did not make the
deputized special attorney the counsel
of record.[65] (Citations omitted)
Here, the Office of the Solicitor
General, as the principal counsel, is
shown in both the deputation letter
Notice of Appearance filed before the
trial court.
The Solicitor General could have
contested the June 27, 2008 and
October 17, 2008 Orders, but she did
not. There was no explanation of her
inaction in any of the pleadings. By the
time petitioner filed a Petition for
Certiorari, estoppel by laches has
already set in.
Petitioner's second claim is a question
of fact improper in a petition for
review under Rule 45. In DST Movers
Corporation v. People's General
Insurance Corporation:[80]
A Rule 45 petition pertains to
questions of law and not to factual
issues. Rule 45, Section 1 of the 1997
Rules of Civil Procedure is
unequivocal:
SECTION 1. Filing of Petition with
Supreme Court. — A party desiring to
appeal by certiorari from a judgment
or final order or resolution of the
Court of Appeals, the Sandiganbayan,
the Regional Trial Court or other
courts whenever authorized by law,
may file with the Supreme Court a
verified petition for review on
certiorari. The petition shall raise only
questions of law which must be
distinctly set forth.
Seeking recourse from this court
through a petition for review on
certiorari under Rule 45 bears
significantly on the manner by which
this court shall treat findings of fact
and evidentiary matters. As a general
rule, it becomes improper for this
court to consider factual issues: the
findings of fact of the trial court, as
affirmed on appeal by the Court of
Appeals, are conclusive on this court.
"The reason behind the rule is that
[this] Court is not a trier of facts and it
is not its duty to review, evaluate, and
weigh the probative value of the
evidence adduced before the lower
courts."[81](Citations omitted)
II
The general rule is that government
funds cannot be seized by virtue of
writs of execution or
garnishment. This doctrine has
[84]
been explained in Commissioner of
Public Highways v. San Diego:[85]
The universal rule that where the
State gives its consent to be sued by
private parties either by general or
special law, it may limit claimant's
action "only up to the completion of
proceedings anterior to the stage of
execution" and that the power of the
Courts ends when the judgment is
rendered, since government funds and
properties may not be seized under
writs of execution or garnishment to
satisfy such judgments, is based on
obvious considerations of public
policy. Disbursements of public funds
must be covered by the corresponding
appropriation as required by law. The
functions and public services
rendered by the State cannot be
allowed to be paralyzed or disrupted
by the diversion of public funds from
their legitimate and specific objects, as
appropriated by law.[86]
Simply put, "no money can be taken
out of the treasury without an
appropriation[.]"[87] Here, the trial
court already found that:
[T]here is an appropriation intended
by law for payment of road-rights-of-
way. Defendant [respondent here]
even called the attention of the court
of the existence of SAA-SR 2009-05-
001538 of the DPWH Main and/or
Regional Office appertaining to the
fund intended for payment of the
road-rights-of-way.[88]
Even petitioner admitted in its
Memorandum "the approval of
allocation for payment of road right of
way projects within Region 10 under
SAA-SR 2009-001538[.]"[89] Since
there is an existing appropriation for
the payment of just compensation, and
this Court already settled that
petitioner is bound by the
Compromise Agreement, respondent
is legally entitled to his money claim.
However, he still has to go through the
appropriate procedure for making a
claim against the Government.
In Atty. Roxas v. Republic Real Estate
Corporation,[90] this Court elaborated
on the proper process of raising
money claims against the government.
In that case, the trial court issued a
writ of execution over the government
funds for payment of land reclaimed
by Republic Real Estate Corporation.
This Court held:
The case is premature. The money
claim against the Republic should
have been first brought before the
Commission on Audit.
The Writ of Execution and Sheriff De
Jesus' Notice [of Execution] violate
this Court's Administrative Circular
No. 10-2000 and Commission on Audit
Circular No. 2001-002, which govern
the issuance of writs of execution to
satisfy money judgments against
government.
Administrative Circular No. 10-2000
dated October 25, 2000 orders all
judges of lower courts to observe
utmost caution, prudence, and
judiciousness in the issuance of writs
of execution to satisfy money
judgments against government
agencies. This Court has emphasized
that:
....
. . . it is settled jurisprudence that upon
determination of State liability, the
prosecution, enforcement or
satisfaction thereof must still be
pursued in accordance with the rules
and procedures laid down in
P[residential] D[ecree] No.
1445, otherwise known as the
Government Auditing Code of the
Philippines (Department of
Agriculture v. NLRC, 227 SCRA 693,
701-02 [1993] citing Republic vs.
Villasor, 54 SCRA 84 [1973]). All
money claims against the Government
must first be filed with the Commission
on Audit which must act upon it within
sixty days. Rejection of the claim will
authorize the claimant to elevate the
matter to the Supreme Court
on certiorari and in effect sue the State
thereby (P[residential] D[ecree] [No.]
1445, Sections 49-50).
For its part, Commission on Audit
Circular No. 2001-002 dated July 31,
2001 requires the following to
observe this Court's Administrative
Circular No. 10-2000: department
heads; bureau, agency, and office
chiefs; managing heads of
government-owned and/or controlled
corporations; local chief executives;
assistant commissioners, directors,
officers-in-charge, and auditors of the
Commission on Audit; and all others
concerned.
Chapter 4, Section 11 of Executive
Order No. 292 gives the
Commission on Audit the power
and mandate to settle all
government accounts. Thus, the
finding that government is liable in
a suit to which it consented does
not translate to enforcement of the
judgment by execution.
As a rule, public funds may not be
disbursed absent an appropriation of
law or other specific statutory
authority. Commonwealth Act No. 327,
as amended by Presidential Decree
No. 1445, requires that all money
claims against government must first
be filed before the Commission on
Audit, which, in turn, must act upon
them within 60 days.
Only when the Commission on Audit
rejects the claim can the claimant
elevate the matter to this Court on
certiorari and, in effect, sue the
state. Carabao, Inc. v. Agricultural
Productivity Commission has settled
that "claimants have to prosecute
their money claims against the
Government under Commonwealth
Act 327 . . . and that the conditions
provided in Commonwealth Act 327
for filing money claims against the
Government must be strictly
observed."
Here, as in Atty. Roxas, respondent
failed to show that he first raised his
claim before the Commission on Audit.
Without this necessary procedural
step, respondent's money claim
cannot be entertained by the courts
through a writ of execution.
III
Under Article III, Section 9 of the 1987
Constitution, "[p]rivate property shall
not be taken for public use without
just compensation."[92]
This Court notes that for almost 20
years now, petitioner had been
enjoying the use of respondent's
property without paying the full
amount of just compensation under
the Compromise Agreement.
Respondent had been deprived of his
property for almost two (2) decades.
In keeping with substantial justice,
this Court imposes the payment of
legal interest on the remaining just
compensation due to respondent.
Consistent with this Court's ruling
in Nacar v. Gallery Frames,[93] this
Court imposes interest at the rate of
twelve percent (12%) per annum
from the time of taking until June 30,
2013, and six percent (6%) per annum
from July 1, 2013 until fully paid.[94]
Thus, respondent's money claim
under the Compromise Agreement
should be adjusted to reflect the
interest rates imposed by this Court.
WHEREFORE, premises considered,
the Petition is PARTLY
GRANTED. The Court of Appeals July
29, 2011 Decision in CA-G.R. SP No.
03710-MIN is REVERSED and SET
ASIDE, insofar as it affirmed the
September 22, 2009 and April 23,
2010 Orders of the Regional Trial
Court in granting respondent Benjohn
Fetalvero's Motion for the Issuance of
an Order for a Writ of Garnishment.
This is without prejudice to his filing
of adjusted money claim before the
Commission on Audit.

The remaining just compensation due

to Benjohn Fetalvero under the
Compromise Agreement is subject to
interest at the rate of twelve percent
(12%) per annum from the time of
taking until June 30, 2013, and six
percent (6%) per annum from July 1,
2013 until the allowance of the money
claim by the Commission on Audit.

SO ORDERED.

Peralta, (Chairperson), A. Reyes, Jr.,

Hernando, and Carandang,* JJ., concur.